The Scoping Study is the turning point between discovery of a Mineral Resource and its potential development. It is an exciting time of what-ifs and potential riches. The main purposes of a Scoping Study should be:
- Indication that the project has the potential to be economically viable based on a reasonable set of assumptions
- Identify a range of strategic options which require further data collection and analysis
- Indicate the portion of the Mineral Resource that may be economic, to focus drilling efforts (and costs)
The Scoping Study is also the point that the journey towards success, or failure, is commenced. Which path will you take? We want you to get on the path that leads to success.
So, it is worth taking the time to learn from some common mistakes we have seen in our 30 years of completing (and reviewing) these studies.
- Skipping the study: It may be tempting to jump straight from discovery to Feasibility Study, thinking it will save time and money. Unfortunately, this is usually a false economy, because you lack the focus of what to do during the next phase of data collection.
- Starting with a fixed answer in mind: This project is going to use Project X with mining method Y at production rate Z. This is a pretty big punt to take, based on limited (or no) information. If you are correct (and how would you even know without considering the options), then that is great. If you are wrong (even slightly), you take the risk of needing to go back to the start, having collected a huge amount of useless data. This is more common that you would like to believe.
- Not getting the team right: It may be tempting to do the Scoping Study yourself to save money and skip expertise from key disciplines. However, the Scoping Study is the point where experience is potentially most important. Including team members who have seen past successes and failures for similar projects can help steer the project in the right direction and get the data collection planning right.
- Oversimplifying the project: The most common issue with Scoping Studies is the oversimplification of the project. How many projects have you seen where the economics improve at subsequent study stages? (note to self – that would be an interesting study!) Not many I bet! The thinking is usually that processing will be simple, the resource is uniform and abundant, the market will buy the product for a premium price (because your product is of superior quality), etc. A good resource owner will know the important aspects of your project (which are project dependent) and take effective steps to identify the areas of complexity, and avoid embarrassment in later announcements.
- Not understanding your public reporting requirements: Speaking of avoiding embarrassment, Scoping Studies are a common source of errors and retractions in ASX announcements, due to the complexity of announcement inventory and financial information in the absence of an Ore Reserve. We always recommend having your announcement reviewed by the ASX prior to release.
If you would like a credible, experienced partner to help progress your project at this vital stage of its potential development, contact us at firstname.lastname@example.org.